US FCC pauses clock on Comcast-TWC, AT&T-DirecTV merger reviews

The FCC has once again stopped the 180-day time clock on its review of the proposed mergers of Comcast and Time Warner Cable, and AT&T and DirecTV, citing a pending court ruling on access to confidential documents on dealmaking contracts that reveal programming terms. With the Federal Communications Commission’s release of the long-awaited Open Internet Order on net neutrality and broadband regulation at the end of last month, its plate is cleared to tackle the proposed Comcast-Time Warner Cable merger that has been under review for a year. The FCC briefly stopped its informal 180-day shot clock for deciding the deals in both October and December because of problems getting information it says it needs to review the transactions.

If approved — an outcome analysts feel is likely — the merger would more than double Comcast’s market share in California and create a Comcast-Cox duopoloy among tri-county cable providers. Major media companies like CBS, the Walt Disney Co. and 21st Century Fox are challenging the FCC’s plans to allow third parties to review programming contracts and other information as part of the merger review. The coalition’s paper was released in connection with a news conference in which group officials said that net neutrality alone is no solution to the issues raised by the merger.

Since the FCC isn’t actually required to make a decision within that 180-day time frame — and has regularly blown past that deadline in the past — the action doesn’t actually mean anything. If the deal goes through, South Santa Barbara County, served by Cox, will be the only area within the region that doesn’t fall under the Comcast flag. Those third parties would still be bound by a protective order, although media companies say they fear that the information will be used in future rights negotiations.

In both the news conference and the paper, the group cited problems in getting conditions of Comcast’s deal for control of NBCUniversal, complications over potential control of Latino markets and issues concerning concentration and control of the market for set top boxes among its concerns. The FCC wants to make certain confidential information — which would include contracts that Comcast, TWC, and DirecTV have with broadcast and cable TV networks — available for review by attorneys of third parties with a direct interest in these mergers. At the state level, the California Public Utilities Commission will vote March 26 on whether to approve the merger, with some stipulations it set forth in a report last month that include improved diversity benchmarks, expanded access and upgraded infrastructure.

The FCC already has these documents and is free to review them on their own, but the broadcasters object to the notion of this sensitive data being shared with people outside of the Commission, even if done under high security and strict non-disclosure agreements. She said the agency “appears to be making significant progress in the review.” The clock in Comcast’s $45.2 billion merger proposed in February 2014 was stopped twice before, for 42 and 21 days. Comcast on Thursday rejected the charges as old and said it had made a “compelling argument” that the deal would offer consumers benefits including faster Internet connection speeds.

The Commission first rejected a request by media companies — including CBS, Disney, Fox, Time Warner, Viacom, Univision — who then took the matter to a federal appeals court. What will require a lot of time and attention is updating the tri-county’s web of legacy infrastructures outfitted for an array of mostly outmoded technology, McDonald said.

It said the group’s suggestion that Comcast would have the incentive and ability to harm other potential providers of cable channels who want to reach Comcast subscribers over the Web “contrary to marketplace facts and nothing but baseless speculation.” A spokeswoman for The “Stop Mega Comcast” Coalition called the company’s assertions “yet another arrogant missive” and an attempt to downplay the deal’s potential harms. “Comcast is yet again creating a fantasy world where it has never flaunted regulations, thwarted competition or mistreated customers. The record demonstrates that the merger threatens serious harms to competition and consumers and runs counter to antitrust and communications laws,” the spokeswoman said.

Then on Feb. 20, the three-judge appeals court panel heard arguments from both sides regarding the necessity of sharing the information with third parties. While Comcast’s network has traditionally been built up around residential neighborhoods, McDonald said the company will be concentrating on developing connectivity in city centers and business corridors. “And I think what we’ve shown, with the NBC Universal merger [in 2013], is that we’re going to invest in the things we purchase,” McDonald said.

The broadcasters claimed that the FCC would normally have taken 20 days to consider such an objection, but in this case the Commission only took five days before deciding in a 3-2 vote to move ahead with sharing the confidential info. Under the proposed merger agreement, Comcast would take over all of the Time Warner systems in Southern California, including virtually all of Ventura County.

In a second stage transaction, Comcast and Charter would engage in a series of swaps that would give Comcast more systems on the West Coast and Charter a number of systems in Midwestern states.